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2010 Supreme(All) 658
ALLAHABAD HIGH COURT
P.C.Verma, R.A.Singh, JJ.
U.P.Small Industries Corporation Ltd. -Appellant
Versus
Anupam Housing (P.) Ltd. and another -Respondent
F.A. No. 446 of 2008
Decided On : 18-02-2010
A concluded contract existed between UPSIC and AHPL, AHPL was ready and willing to perform its part of the contract, and the Trial Court rightly exercised its discretion to decree the suit for specific performance of the contract.
Headnote:
SPECIFIC PERFORMANCE - CONTRACT - UPSIC - AHPL - LEASEHOLD INTEREST - NO OBJECTION CERTIFICATE - TRANSFER CHARGES - CONTINGENT CONTRACT - IMPLIED AGREEMENT - CONCLUSION OF CONTRACT - READINESS AND WILLINGNESS - DISCRETION OF COURT: 1. The proposal/offer given by AHPL to the UPSIC did not lapse by reason of the efflux of time. 2. The alleged contract between the UPSIC and AHPL did not require compulsory registration under the provisions of the Registration Act, 1908. 3. The alleged contract was not unenforceable by reason of its contingent nature as the 'No Objection Certificate' was required from the ADA for execution of a transfer deed by the UPSIC. 4. The amount payable to the ADA by the UPSIC for seeking its 'No Objection Certificate' to transfer its leasehold interest and extension of time for construction was to be borne by the UPSIC. 5. A concluded contract existed between the UPSIC and the AHPL. 6. The AHPL has always been ready and willing to perform its part of contract according to the true construction of the contract. 7. The Trial Court rightly exercised its discretion to decree the suit of AHPL for specific performance of the contract.
Fact of the Case:
UPSIC invited tenders for disposal of a plot of land. AHPL submitted the highest bid and the offer was accepted by UPSIC. However, UPSIC failed to transfer the plot to AHPL. AHPL filed a suit for specific performance of the contract.
Finding of the Court:
The court held that a concluded contract existed between UPSIC and AHPL, that AHPL was ready and willing to perform its part of the contract, and that the Trial Court rightly exercised its discretion to decree the suit for specific performance of the contract.
Issues: 1. Whether the proposal/offer given by AHPL to the UPSIC stood lapsed by efflux of time and, therefore, no contract could have arrived at on its basis? 2. Whether the alleged contract between the UPSIC and AHPL required compulsory registration under the provisions of the Registration Act and for want of its registration, no decree of specific performance on its basis could have been passed? 3. Whether the alleged contract was unenforceable by reason of its contingent nature as the 'No Objection Certificate' was required from the ADA for execution of a transfer deed by the UPSIC? 4. Whether the amount payable to the ADA by the UPSIC for seeking its 'No Objection Certificate' to transfer its leasehold interest and extension of time for construction was to be borne by the UPSIC or AHPL? 5. Whether there existed a concluded contract between the UPSIC and the AHPL? 6. Whether the AHPL has always been ready and willing to perform its part of contract according to the true construction of the contract? 7. Whether the Trial Court rightly exercised its discretion to decree the suit of AHPL for specific performance of the contract?
Ratio Decidendi: 1. The offer given by AHPL remained pending and was finally accepted by the UPSIC. 2. The contract between UPSIC and AHPL was not required to be registered under the Registration Act, 1908, as it was not a 'contract for sale' but a 'contract for assignment of leasehold rights'. 3. The contract was not contingent as UPSIC obtained the necessary permission from ADA to transfer the leasehold interest to AHPL. 4. UPSIC was liable to bear the amount payable to ADA for obtaining the 'No Objection Certificate' and extension of time for construction. 5. A concluded contract existed between UPSIC and AHPL as evidenced by the exchange of letters and negotiations between the parties. 6. AHPL was ready and willing to perform its part of the contract as evidenced by its financial capacity and its efforts to obtain the necessary approvals. 7. The Trial Court rightly exercised its discretion to decree the suit for specific performance of the contract as UPSIC failed to perform its part of the contract and AHPL had no adequate remedy in damages.
Final Decision: The appeal filed by UPSIC was dismissed with costs throughout to the respondent no. 1.
This appeal has been filed by the U.P. Small Industries Corporation Ltd., Kanpur (here-in-after referred to as the "UPSIC") against the judgement and decree dated 31.03.2008 passed by learned Additional District Judge, Court No. 1, Agra (here-in-after mentioned as the "impugned judgment") whereby the suit instituted by M/S Anupam Housing (P) Ltd., Agra (in brief as "AHPL") for specific performance was decreed against the UPSIC to execute a transfer-deed in favour of the AHPL (Respondent No. 1) regarding the leasehold interest of the suit property being Block No. 86/4, measuring 606.17 sq. mtrs. situated in the Sanjay Place Commercial Complex at Agra after obtaining 'No Objection Certificate' in its respect from the Agra Development Authority (ADA) (Defendant No. 2).
2.The brief facts giving rise to the present appeal are:
(i) The AHPL instituted a suit in the Court of the Civil Judge (SD), Agra being Original Suit No. 306 of 1998, arraying therein the UPSIC and the ADA as the Defendant Nos. 1 and 2. The plaint (paper no. 4-A) allegations were:
(ii). The plaintiff is a private limited company duly incorporated under the Indian Companies Act, 1956 and Inder Chand Jain is its Director having a right and authority to file the suit. The Defendant No. 1, UPSIC, is also a company. The ADA granted a lease in favour of UPSIC in respect of the plot of land bearing Block No. 86/4, measuring 606.17 sq. mtrs. situated in Sanjay Place Commercial Complex, Agra for a period of 80 years vide lease-deed dated 24.09.1992.
(Iii). It was further averred in the plaint that UPSIC decided to dispose of the above plot and invited tenders for its disposal after giving wide publicity in various National daily newspapers on 19.01.1996, 20.01.1996 and 21.01.1996. Pursuant thereto, five offers were received by UPSIC including one dated 01.02.1996 (Annexure P-1 to the plaint) of the AHPL for a sum of Rs. 55,21,000/- along with its earnest money of Rs. 50,000/-, and subject to the condition that the transfer charges for the grant of permission by the ADA or the non-construction levy, if payable to the ADA, were to be borne by the UPSIC. On 02.02.1996, the AHPL revised its offer by raising price to Rs.75,51,000/- and maintained the other terms mentioned in its initial offer (Annexure P-2 to the plaint). The UPSIC, thereafter, invited the tenderers for negotiations in its office on 08.03.1996 vide its letter dated 01.03.1996 (Annexure P-3 to the plaint). Before the Committee constituted by the UPSIC, all tenderers appeared and AHPL, in continuation of its offer dated 01.02.1996 and revised offer dated 02.02.1996, further revised and enhanced the amount to Rs.75,11,000/- (Annexure P-4 to the plaint), which worked out to Rs. 12,391/- per sq. mtr. On 10.04.1996, the AHPL requested the UPSIC to take an early decision (Annexure P-5 to the plaint). The UPSIC, vide its communication dated 20.05.1996 (Annexure P-6 to the plaint), called AHPL's representative and two other tenderers for further negotiations on 25.05.1996 in connection with their offers pending with the UPSIC. Pursuant thereto, the representative of AHPL reached the office of UPSIC on 25.05.1996 and explained to the Committee about the reasonableness of the price offered by it. It was brought to the notice of the Committee that the ADA was selling its commercial plots with permission to construct 8 (eight) storeys in Sanjay Place at Agra @ Rs. 12,500/- per sq. mtr., while on the disputed land, the constructions could be raised only upto 4 floors. Being satisfied, the Committee of UPSIC recommended the offer of AHPL for its acceptance to the Board of Directors of the UPSIC vide its report dated 25.05.1996 (Annexure P-7 to the plaint). Thereafter, this matter was taken up in the 179th meeting of the UPSIC as agenda Item No. 18 on 02.07.1996 (Annexure P-8 to the plaint), but no decision could be taken. Then the matter remain pending and the representative of AHPL used to meet and send letters
